FRS Update #13 (5/2/2011)

Well the House and Senate have finally came to an agreement regarding the changes to the Florida Retirement System (FRS). They are BAD, but not nearly as BAD as they “could” have been, that’s politics! As we have been stating all along, none of the changes will impact anyone who is already retired (including those already in DROP, or those in DROP prior to 7/1/2011). Most of the major changes will affect new hires after 7/1/2011.

I have listed the main changes:

Changes that affect NEW hires after 7/1/2011:

– Increase retirement age for ALL new hires after 7/1/2011:

– Regular Class members will increase from 62 to 65, or increase from 30 yrs of service to 33 years of service

– Special Risk members will increase from 55 to 60, or increase from 25 yrs of service to 30 years of service

– For all new hires after 7/1/2011, the Average Final Compensation (AFC) will increase from 5 years to 8 years. – New hires will still have the option of the Pension Plan

– Vesting will go from 6 years to 8 years for all new hires after 7/1/2011

Changes that will affect current FRS members: These changes DO NOT affect people who are retired or in DROP prior to 7/1/2011

– DROP will be extended, however the DROP interest rate will decrease to 1.3%

– ALL members will be required to contribute 3% of gross compensation to their FRS

– There will be no more Cost of Living Adjustment (COLA) for all service after 7/1/2011. This change will not affect employees that are within a few years of retirement that much. However, this is a major change that will force employees with more that 5 years till retirement to better save through personal retirement accounts like 403b, 457, Roth IRA, Traditional IRA, or Cash Value Life Insurance.

The Governor is expected to sign this bill into law by 5/31/2011. If he does it would become law effective with the start of the new fiscal year on 7/1/2011.

My advice is that if you think that these proposed changes could impact your decision on when to retire or when to enter DROP, PLEASE email me ASAP to schedule a time to meet and discuss. We want to make EDUCATED decisions to make sure you have the best retirement possible.

If you know anyone who would benefit from my FRS updates please forward my email to them OR send me their name and email address and I will add them to my email list.